it looks for the termination to buy the company. pinterest shares soaring despite the miss on earnings and revenue. we will tell you what is behind the move higher. it is tuesday, august 2nd, 2022 and "squawk box" begins right now. good morning welcome to "squawk box" right here on cnbc i'm andrew ross sorkin along with joe kernen. becky is out today joe, the boys this morning we have a lot going on this morning. right now, you are looking at the dow off 155 points nasdaq off 127 points. s&p off 31 points. let's show you treasury yields 10-year treasury is standing at

2.550. we were discussing it yesterday. it appears to be getting closer now. house speaker nancy pelosi expected to visit taiwan later today. stocks in china tumbling overnight. falling more than 2% in shanghai, joe. folks have been worried about it on one end or cheering on the other. >> not cheering. it's a weird sequence the way it happened where congress is allowed -- executive branch doesn't visit taiwan it is not unheard of for congress members she's been there before. they've been to taiwan a bit the speakerhasn't been there for 25 years since newt gingrich if president biden hadn't said i

don't think she should go, i don't know if china would have said it. maybe they said it was an opening. we can wedge ourselves between president biden and nancy pelosi the journal piece today belocost said when president biden said we would defend taiwan and walked back by people in the administration there's been no change in the one-china policy if they really do -- i don't know, stop her plane, it might force the hand -- it doesn't seem like taiwan reunification is a planned or peaceful thing they may take themselves to do it then people say we need to, not act on it, but make it policy what president biden said on

three occasions. aside from that. 255 on the 10-year treasury. 255 on the 10-year treasury. no recession we'll see. did you see this i thought sentiment was improving. meaning that people were getting bullish. people were getting bullish which would be bad this says people think they don't believe this rally >> remember the wall of worry. climb the wall of worry. >> let's put some bricks in there today. markets are down today this is the story and it is affecting financial markets. the taiwan story, andrew >> 100%. let's bring eunice yoon into the conversation she is in beijing. her evening, of course eunice, what are you hearing on the ground >> reporter: most people across asia at this point are waiting andwatching to see whether or

not speaker pelosi is going to touchdown in taiwan today as has been reported. the local media on the island has said she is expected to arrive at 10:20 p.m. local time. a little over four hours from now. although there are other reports that say she may show up early on wednesday morning the taiwan media says while in t'aipei, speaker pelosi will meet with president tsai ing-wen and other activists including from hong kong china sees the pelosi visit as the challenge to the sovereignty. china claims taiwan as its own the foreign ministry says if pelosi visits, the u.s. will quote pay the price. we're already getting a little bit of a sense of how beijing could react. taiwan officials said that chinese fighter jets have flown

very close to the median line in the taiwan straits the media has been quoting military official or experts saying the pla is preparing for all scenarios including a local conflict turning into a comprehensive confrontation. then there is something economic pressure that we're starting to see on taiwan companies. china said it is banning exports from 100 taiwan food suppliers of thsuppliers. they are not saying it is because of the pelosi visit, but citing importing documentation most people believe these situations are linked. guys. >> before you go, a lot of debate in the united states whether she should go. often times the conversation turns not to whether she should go or the timing of the visit given the politics of the moment

in china and given president xi's future. can you contextualize that >> reporter: she was supposed to come out here in april, but she caught covid and couldn't come the political leadership is expected to have a reshuffle in the fall xi jinping is expected to get a third unprecedented term because of that, he needs to be seen as a very strong leader so you have that dynamic going on where the calculation is he needs to show the public here that china is strong and will stand up to the americans and then other problems that the chinese are currently having to deal with is british lawmakers are now reportedly talking about coming to visit taiwan at the end of the year. there might be other western

leaders emboldened to visit taiwan later this year that is the scenario that china would not want to see. >> eunice, that's -- that's what i'm trying to figure out how president xi would appear -- i don't know -- to the entire planet -- wouldn't he appear stronger if there was calm before this and he is a sober leader that realizes china is in its an sscendency? all of these things mentioned in the journal that he could stir up national fervor in anticipation it seems this is not his first trip around the block. the third time he is appointed

at that point, i would think he would want to be seen as a stable, mature, wise leader and have calm before this happens. what do you think? >> reporter: well, it's very difficult to say obviously, president xi will want to look strong. if he does take as you are suggesting possibly a calculated bet he wants to, you know, go ahead and make a military move on taiwan, he has to think about the detrimental effect it could have on china. you know, he does have to manage this economic situation which is currently not going very well. the relationship with the u.s. is kind of in the doldrums he is not seen as the best when it comes to zero covid a lot of people are frustrated although they don't talk about

it publicly. he is managing a difficult situation. he wants to make sure he propro projects himself as strong as doesn't put china in a situation where the economy and society starts to turn on him ultimately and on the chinese communist party. >> eunice yoon, thank you. joe. thank you. coming up, twitter -- as a state -- does he care about being a statesman? andrew, i think for me that is the way i would handle it. wouldn't you >> by the way, maybe he will be forced to handle it as a statesman in this moment you know my view the priority when you decide to pick your fights is this one of the moments >> it is too late. it's too late.

>> the relationship -- >> it's too late for her to back down. >> maybe the situation in china is the human dynamic of respect is interested super important i know a lot of people don't respect the chinese. i think if you are trying to have a relationship recognizing the different cultures if i say these things, i'm described as a panda hugging or something or other i don't know >> they're pretty cute i mean, it's hard not to -- in the cincinnati zoo, they had great success with pandas. i know a little bit about that pandas. twitter seeking information from elon musk's friends and associates as the deal goes to court. and later, activist investor

bill ackman is speaking out over visa to allow porn hub to use the payment system with the knowledge it knew about the illegal activity on the platform you are watching "squawk box" on cnbc

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welcome back to "squawk box. twitter is looking for more information in a far reaching legal request in the $44 billion deal to buy the company by elon musk the subpoena issued by twitter yesterday. the legal team asked for high profile associates of musk including names that may be well known to the audience. spacex board member and joe lansdale among others. a number of banks involved in the transaction as well with credit suisse and morgan stanley. the net widens and soap opera continues. joe, what do you think they are looking for? >> i don't know. i harken back to joe's comments.

elon can't be great at everything it was well intentioned. you saw the weird story of elon's father who says he is not proud of elon, but more proud of the cowboy hat wearing brother says elon needs to take some diet pills >> i saw that. >> must have been from the tab tabloid. >> you know, i give elon musk credit for this. self deprecating someone asked about that picture. he said in my opinion, it is inspiration to get to the gym. >> look, we -- i won't speak for you. i think he is a demi-god maybe not quite water, but even with twitter it looks like that's a bad expression he acted first and thought about

it later i think his initial therinteres was a sense for censorship he will take this upon myself. now he got in so deep. then people said he would not do it he had to do it. he got the financing lined up. he caught the bus, like the dog, and said what will i do with the $10 million bus i just paid $44 billion for. the guy changed the world and became the richest person on the pl planet i don't know if you aspire to that i would be proud of him if he was my son wouldn't you >> i think he has done a lot of good things. i think there are certain questions, as you know -- >> flame thrower started it for

you. the spiral >> it is not a spiral for me i think -- >> the time in hollywood >> i think this guy has changed the world for the better no question. then you can also knit pick. that is how people are if you are just looking at the whole of it all and the contribution he made to the world, i think it is unques unquestionable >> i'm trying to think of the perfect person edison or steve jobs or ben franklin >> you could knit on all of them >> of course you can find something maybe just the two of us there's nothing with us really we are what we are we are what we are >> pretty perfect. >> i compared us to thomas edison and steve jobs. i lost my mind the latest from paychex and

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small business hiring slowing for the fifth consecutive month, but it is in part due to the shortage of applicants joining us for a check on employment ahead of the job reports is marty mussey. ceo of paychex marty, this is continuing to be a supply issue are you seeing any cracks at all

in demand? the reason i say that, you know, although unemployment claims were really low, they started it t ticking up a little. has the second derivative changed? is it slowing a little bit >> you know, not really, joe we are seeing job postings up tremendously postings particularly in leisure and hospitality. we're down 1.3 million in employment since to pre-pandemic levels where you are seeing transportation jobs up and warehousing jobs up and professional jobs up the postings for leisure and hospitality are way up you see people and businesses continue to be flexible. offering more benefits and wages and seeing the states being creative like new jersey starting to allow 16 and

17-year-olds pass a bill to work up to 50 hours a week and streamline the work paper progress it is faster now they are trying to help feed the supply >> okay. we are trying to get at is whether these two consecutive quarters of negative gdp and if that is an indication of a slowdown people say it is not because of the employment picture the employment picture seems more important than ever friday is an important day and number you don't think you are seeing weakness in employment which would confirm the people who say we're in a recession you don't think that is evident? >> not seeing it at all. job growth decelerated across the country and strongest in the southern states in texas and florida and georgia and north carolina those are the strong places. dallas and houston from the city perspective. we're seeing trying to find the people for the jobs. particularly in leisure and

hospitality. that's the tough part. >> wages have slowed the gains we have seen are slowed from strong levels? >> still over 5% you know, if you look at different sectors, they are close to 7 other services around 7% wage increase leisure and hospitality over 7%. it decelerated this month, but wage increases have been over 5% 18 months ago, it was 2.5% wage increase it has gone up quickly as people have needed to pay to find people. >> do you think friday's number will be strong do you expect the participation right inch higher because the demand is so strong for people will they come back into it with the inducements you described

from employers >> joe, we have not seen that yet. participation rate is down from 63% during pre-pandemic. i don't think we will see that move savings rates are coming down from the stimulus money. inflation is out there bothering people we are still not seeing more people come back to the market to fill the supply needed. you know, i think the jobs numbers will be consistently strong for the last few months i don't think it will be a huge number or anything that is a big change >> do you have a feeling for this and tyanti-inflation bill o a lot of manufacturing companies? is that the wrong thing? do you have an opinion on that >> i guess my opinion is when you tax companies, particularly this will hit manufacturing companies, it could hit smaller

manufacturing companies. real small businesses don't have that much operating income it is not a big impact from the tax perspective. manufacturing companies in the 150 to 250 employees could hurt them at the time of supply issues and inflation issues and job hiring issues. it is not a great thing from the timing perspective in my opinion sdp opinion. >> wow i don't think you ever stepped out on a limb today, marty. >> just for you, joe. >> telling us what you think thanks, marty. >> thanks, joe >> chairman and ceo of paychex. thank you. coming up, caterpillar is set to report from a few minutes from now. we will bring you the numbers from wall street as we head to break, this is a look at the s&p 500 winners and losers

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good morning welcome back to "squawk box" here on cnbc take a look at the futures right now. we are in the red this morning

186 points down on the dow if we on opened now. nasdaq looking to open 134 points down. s&p 500 off about 35 points. our top story. house speaker nancy pelosi expected to visit taiwan today reports of her visit sparking several warnings from beijing which views taiwan as part of its territory. the spokesperson said beijing's army would never sit idle by and uphold the sovereignty territory. the major indexes in hong kong and mainland falling 2%. the japanese yen is a safe haven and strengthening against the dollar up 5% in the last week joe. andrew, caterpillar. it is down tough to say 1.90 to 1.98

that looks like a real trade $3.13 adjusted versus $3.01. let me make sure that is apples to apples. adjusted to $3.18. that is better than $3.01 of the let's get a revenue number the street was looking for $13.346 billion. revenue of $14.2 billion that is below. 14.2 is a miss i don't know if that accounts for what we are seeing about 1.5% drop in the stock looking for future guidance on the rest of the year looks this is the second quarter obviously it is a calendar year we're talking about for caterpillar. operating margin was 13.6%

total net was 1.676. $708 million and machine and transportation accounts for the rest of $13.54 billion if we see it down almost $3 now. if we see a forecast for the future, it is perhaps revenue miss is enough to explain the 1.5% drop in the stock we will see. the ceo jim umpleby will be on "sid "squawk on the street" at 9:00 in the exclusive interview more about earnings and earnings season and joining us for that is the senior investment strategist at edward jones and investor for citi

global wealth. we have been watching the situation with taiwan and nancy pelosi and how the markets reacted. i'm curious before the earnings picture what you think of the macro situation and the anxiety, mona, that people are having about it >> andrew, this geopolitical tension has been a theme we have been seeing all year weighing on markets. it started with the ukraine and russia crisis which driven economic issues as well with loyal energy and food and grain prices now the china and the lockdowns all year we are now getting more of the geopolitical tension as well of course, the risk and concern is that we have a russia/ukraine 2.0. more severe coming out of china. for now, it is a tail risk the rhetoric and headlines start to intensify it is something we need to watch

going forward. >> kristen, how concerned are you about that and how concerned are you with the earnings? it has been a mixed picture. you can pick your poison you can pick your stock with one company which is doing fine and other companies are down in the dumps at this point. >> i think related to geopolitical tensions, i agree one more thing to create volatility one more thing to create inflation pressure and supply chain constraints. shor short-term, it is not a risk i think everything driving markets right now is the earnings the rally we have seen, to your point, some missed and some beaten we are at a rate of 75% of companies coming in above estimates. they were better than feared i think some of the data that a lot of people are paying attention to is as it relates to

the health of the consumer consumer spending is 65% of gdp. what are earnings telling us about the health of the consumer and how they are spending money? i think the area to pay attention to this week is not just the story about nominal sales. nominal sales benefit from inflationary pressures real unit sales and the consumer behavior is shifting in a more significant way and pulling back on expenses and focusing on durable goods. >> and how long do you think that is the case do you luook at this as a temporary situation or is this something we are living with for years? >> that is the $64,000 question in terms of whether or not this is a transitory inflationary environment at this point in time or if it is sticky or commodity prices roll over that is the debate with the soft landing from the fed or we tip

over to recession. the thing to look at from the market perspective and looking at that perspective, some are looking at the pull back we have shelter costs that weigh old on the consumer and affecting spending patterns. re rents are up 30% in new york year over year you need to prepare for both the idea we could be in a slowing growth environment or that we may tip over into recession given the tightening the fed will continue to pursue. >> mona, is there anything you like in the environment? >> you know, the markets just climbed several walls of worry kristen talked about the earnings picture coming out better than feared the fed as well hinting at moving a more gradual pace going

forward. inflation pressure and expectation and inflation rates moving lower that's really supported yields moving lower and risk assets moving higher. especially the longer duration we would be defensive oriented given that yields could move higher as the fed and quantitative tightening are back in play over the next several months maybe not back to the 3.50 on the 10-year treasury, but higher to add volatility to markets defensively oriented for now we knowledge that when inflation rolls over in earnest, that is when growth parts of the market could mount to more sustainable rallies. think of the bar bell positions over the next few months that is something that could provide sustainable out performance in 2023. >> okay. mona and kristen, we leave the

conversation there we appreciate it we will see where the market leads us soon. joe. coming up, stocks to watch including a earnings beat for energy giant bp. you don't say? that's next. don't miss our interview with bill ackman you can watch us anytime on the cnbc app

welcome back we're down u.s. equities down 200 points now as you can see s&p down 33 nasdaq down 123. we have the 10-year treasury yields continues to fall on the slowdown fears all these cross currents slowdown in overall growth a strong labor market. there's 2.55 on the 10-year treasury. shares of oil are higher from bp. the company reported a profit of $8.5 billion against the street of $3 billion. it announced the 10% increase in the quarterly dividend payout to shareholders. devon energy beat the street for the quarter. oil production was up for the

quarter. it raised the full year production forecast by 3% to 600,000 barrels. look at this, joe. pinterest shares are higher. sharply higher earnings and revenue missed estimates. the loss of monthly users not as bad as feared. activist investor elliott management confirming pinterest is the biggest shareholder and conviction of the opportunity at the company. the revenue forecast came in below the estimate the stock up close to 19%, joe meantime, the s.e.c. filing a civil complaint charging people creating a fraudulent crypto focus pyramid scheme. the s.e.c. said the forsage was billed as a decentralized

contract firm to enter into transactions on the blockchainst functioned like a pyramid scheme by promoting others into the operation. forsage did not comment. when you have a new thing like crypto, you have to imagine pyramid schemes and other fraud, sadly, is taking place i'm surprised we haven't seen more >> you know, people characterize the entire thing the subdivision of the ponzi scheme pinterest was almost a $50 billion company. i was just looking at it it is $11 billion now. up more today. that was another one

$80 at the high. a lot of stocks are cheaper than they were. california has become the third state to declare a state of emergency over the rapidly spreading monkeypox outbreak following illinois and new york. three states reported 47% of all confirmed infections in the u.s. rarely fatal no deaths have been reported in the united states. some patients suffering excruciating pain. some officials feel it could become endemic and something you have to worry about. president biden plans to name top officials from fema and the cdc as white house coordinators to combat the outbreak coming up, we have a lot on "squawk. we have daniel amos joining us after the break. later, senator tom cotton

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aflac shares are higher. company reported $5.4 billion revenue. compared to $5.6 billion in the prior year the bottom line number was higher than last year. stocks roughly flat for the year joining us now is the longest serving ceos in corporate america. dan amos chairman and ceo at aflac. good to have you on. you have been through so many versions of the commercials. you have been coming on the show for 20 years

>> actually, this is my 32nd year of ceo. only warren buffett has been around longer than me. joe, 26 years or 28 years, i guess it has been. >> you have been coming on the show >> me 26 year, 28 years. >> that you've been coppiming o the show >> you don't age though. >> stop. i got to work hard at that it's a really great business complex business, 70% of things come from japan, cancer insurance. it's very interesting, but there's yen-related issues, currency-related issues, investment, since you're an insurance company. and all the cost ratios. all these weird things that the ak warial.

how did you do in terms of the bottom line? was it investment that you bh mad with the premiums? >> certainly the investment, the strategy that we have used we've been well-positioned because the yen has weakened so much we have been buying in our portfolio dollar-denominated issues the and weave've changedo where for every five yen it affects our earnings by two to three cents. but the overall operation continues to do well partly do to we have lower expenses, and we've seen our claims come down some. so it's been predominantly claims and it's beginning to come back

up a little bit, which is what we predicted would happen. and we're, as you saw, had one of the best quarters we've had m o our history. >> what controls claims? >> that's what a ak twaer is paid to do, to calculate what we believe will happen. with covid, one of the questions has been, will you see higher claims and what we have seen is, is the claims have had a lag to some degree say a person had a friend whose wife normally would have gone in for a physical every year because of covid, she didn't go in for two years and what would have been a stage one breast cancer ended up being a stage three breast cancer. so it's what, it has a tail on it it has bigger claims to come so during that period of time

we've been watching to see how much the claims go up from people that didn't go in for their regular treatments >> you just described a horrific effect that i guess we'll know in a few years how that, how the pandemic affected things like that things that were put off or things that weren't diagnosed because they weren't spotted when they would have been earlier. you hedge a lot, or at least you have in the past, currency hedges did you change that to a, so you're able to participate in the strong dollar? >> no, we did, we did about $5 billion worth, it wasn't significant. but we do that to where re-pate rags and any other issues were set on that. but all in all, because the

money that we invested in dollar denominated was in japan, that creates the hedge for us more than anything else so it wasn't dollars buying currency it was more just keeping that japanese portfolio more in u.s. securities with higher yields that helped us >> if you focus on growth, that's going to come from japan, still, isn't it in an and people have said you need to reignite the business in japan or do you see growth in other parts of the world, like the united states? >> no, i do see growth in the united states. in fact, our agents continue to play an important role as we write the smaller companies that the employees, less than 500, and that's been very important to us. it was hurt, probably the hardest, by the pandemic

but the good news is, our broker business is up, even over 2019 numbers. so it continues to grow for us and that's where we think we have potential is with our agents, and saying that, we also believe we're going to come back strong in japan, especially with japan post, who sells for us and the 22,000 offices they have it's beginning to crank back up. and we look for the second half of sales to pick up, japan post and pick up in japan, aflac and also in the u.s. >> are you personal friends with coach saban? this guy's the most successful coach ever, probably and he's co-starring with the duck, wearing a blue jacket and talking with the duck, moving around with, dancing, how do you get nick saban to do that? is he your friend? or is all about the benjamins?

>> it's actually the animal magnetism of the duck. >> of the duck >> its ability to known on nick's iceeyes and hits him in c a way -- >> he dances with the duck he dances with the duck, okay? you knew him did you know him >> yes, i know him and he's a great coach but, you know, i did go to the university of georgia, so i just want to you know -- >> you did oh, i love that. >> i put my alliance at aflac over miay alma mater, and it waa difficult decision when i was first starting in sales, i was in charge of alabama in the early '70s, so i have a special heart for alabama. >> so many bulldogs i love that whole area georgia tech, georgia, that's a

pretty big rivalry, too, down there. thank you. good to have you on. i wanted to get that in. send me one of them blue jackets. i'll wear one of those. >> i'll get you one. be careful what you ask for. you'll get it. >> don't get it yet, i'm going to need a smaller version. because things are happening for me >> okay. joe, we've got some news just crossing the wires. td bank is buying cowen for $39 per share, $1.9 billion in an all-cash deal. giving td a bigger footprint in the u.s. so lots of eyes are going to be focussed on that on wall street this morning meanwhile, when we come back, uber, jetblue and marriott all set to report in the next hour and the reaction on wall street. two big hours ahead right here on "squawk box."

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expected visit to taiwan and we're going to take you tliefrn beijing in just a little bit. and hear from senator tom cotton and earnings rolling on. we're going to run you through the stocks on the move as the second hour of "squawk box" begins right now good morning, and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen live with andrew ross sorkin. becky's off. great start to the second half of the year with july after the worst first half in many, many decades, and, as we have pointed

out, investors fear a quick end to the rally is this the beginning of it today? every day that we get a down move like this people say, see, it's coming. that was a head fake in july, and we're headed back down that's one opinion we'll see. you look at treasuries makes you wonder about overall economic growth when a lot of people thought we'd bees k esco well above the ten-year. 2.56, we've seen yields fall quite a bit we were talking about that yesterday with sri. crypto does seem to be co correlated highly with the nasdaq and crypto, which had been above

23,000, almost 24,000. i'm talking about bitcoin, is now below 23,000 this morning, andrew we have news out just now on uber uber out with its quarterly results. it reported a quarterly loss of $1.33 per share. but the net loss does include a $1.7 billion in unrealized investment losses. wall street had been expects a loss of 26 cents beating the street's consensus of $7.39 billion you're looking at that stock up this morning and we should tell you that uber's ceo will be joining "squawk on the street" later this morning in the 9:00 a.m. hour a conversation you don't want to miss as you're looking through this statement here, the last quarter, i challenged our team to meet our profitability commitments even faster than planned, and they delivered. what you're really looking at in terms of the losses is all those

different investments, including in aurora, and their stakes in zomato but you look at revenue year-over-year 105% up. that's, that's something gross bookings growing 33% year-over-year they're seeing net cash up now was $439 million that's up $780 million year over year and then their free cash flow, the way they're defining it, let's just say how they're defining it as net cash flows from operating activities less capital expenditures only they're saying was $382 million. that's up $780 million, they say, year over year. >> that stock's only down 50% from its high. so that's actually fared better than a lot of the recent high flyer, but big move today, 16%

>> big move, big move. >> somewhat unexpected to be doing so well, i would think did you know that was happening? >> i mean, look, they have basically said that they wanted to get to profitability, and they were trying to balance this issue of profit and growth you know, that was, a year or two ago they probably wouldn't have been this balanced. they wouldn't have been trying to hit some of these numbers they would have been going growth, growth, growth, growth and somehow you see them switch or try to modulate that. and i think the market's giving them credit for it >> let's get to dom. he's still with us dom, i know you've probably got opportuni opportunities everywhere with all these new things going on. >> i'm still here. as long as you guys still want me here. >> we do. >> joe and andrew, and becky joe, to your point, some of the

late-breaking earnings reports that folks are focussing on, dow component caterpillar, a stock down 3.5% to 4%. the maker of construction, mining equipment posting a mixed quarter. earnings better than forecast. cat did say that end-user, its customer demand for that heavy machinery remains healthy but that supply chain issues do exist, so on balance, that down side, 3% to 4% right now you can see over the course of the last couple months here, you see the more median turn down side considered by some to be a global bellwether. then dupont jumping between gains and losses this is very thin premarket volume what you're seeing is down about 2.5% but not a lot of volume.

the current guidance fell short of some analyst expectations they cited foreign currency, headwinds in so. unplanned down time at one of its key sites. dupont, one to watch, then we'll end on oil and gas, bp, about 105,000 shares of premarket volume it, too, reported a beat on profit, on revenue and because the surge in oil and gas price bp raised to its own dividend, also an accelerated share buyback. all of that on balance leads to about a 2% gain in bp. so andrew, big moves in oil and gas, not unlike we saw in exxon, but certainly not chevron worthy >> thank you for that. we'll keep our eyes on all of it meanwhile, the white house

yesterday calling out beijing's rhetoric over speaker pelosi's planned trip to taiwan eunice yoon joins us >> reporter: beijing is firing fresh warning shots, and it's not clear whether speaker pelosi is going to touchdown in taiwan. a very senior official is cited as weighing in, saying that the distastefulness of the u.s. side on taiwan is deplorable. this statement by a very senior official is coupled with another fresh warning from beijing, and that is that china has now suspended and broadened a suspension of imports of over 2,000 taiwan food suppliers. so earlier, just an hour ago, that suspension was for 100 suppliers. now these import bans as well as these statements by senior officials come as speaker please see set, according to taiwan

media to land in taiwan at 10:20 local time that's just in a couple hours. though at the same time, there are some reports that say she might actually show up early on wednesday morning. the local news outlets say once she's in taipei, pelosi will meet with the president, visit other government officials, discuss with activists, including those who've come from hong kong. this, as we've been discussing, obviously, outraging beijing, which claims taiwan as its own and sees pelosi's visit as a challenge to national sovereignty. the foreign ministry said today that the u.s. will pay the price for pelosi's trip. taiwan officials have already said that chinese fighter jets have flown near the median line of the taiwan straits. there's also ongoing military exercises. not only off the coast of mainland china near taiwan but also in the south china sea and

close to the korean peninsula. state media, today, quoted the military expert assaying that the pla is preparing for all scenarios, including a local conflict turning into a comprehensive confrontation. guys >> eunice, appreciate the report what are the newspapers saying what are people locally saying, just on the ground meaning, what's the perception of this trip >> reporter: well, it's very difficult to tell. because all the discussion about taiwan is being very carefully curated online a state media for the most part has been reporting that her, that pelosi's trip could happen but also saying that beijing is ready to come up with any measures that need to, need to take place but, in terms of private conversations, i mean, it really runs the gamut there are several people that think that the whole taiwan

situation is going to hurt, potentially hurt the u.s.-china relationship and on the business side, chinese businesses as well as u.s. businesses are worried about what this potentially could mean for them. >> okay. eunice yoon in beijing this morning. coming up, senator tom cotton on pelosi's visit to taiwan and carson block recently taking a stake in a solar panel company called sun run he joins us to talk his position let's get a check on the markets as we head to break. "squawk box" will be right back. . that's terrible... you gotta put your knees into it, put your knees into it. that's too smooth. too smooth? watch this. ♪♪ you try it. ♪♪

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muddy waters, taking a short position in sun run. leslie picker joins us with the story and the investor behind the call look at you here >> i'm here. >> awesome >> it's been like three years since i've seen you on set >> welcome >> thank you it takes a short report to get me here. short. it was less than a week ago that solar stocks were riding high. the largest u.s. residential

insta installer, sun run but on that same day, they were slammed in a short call report even so, the shares are up by about 24%. mary powell said muddy waters report is flat-out wrong it is an attempt to mislead with grossly false and inaccurate assumptions. for over ten years, our investors, lenders and independent -- joining us to talk about why he is so negative on the stock, let's bring in carson block the day that you released the report, sun run share jumped 30%, last thursday not the usual reaction but that was coinciding with

forward momentum on the climate and tax plan do you believe that these bearish theses really hold up? >> they do, because sun run's growth, if not its whole business, is built on two sets of illusions the first set of illusions says to investors, hey, after all of this debt is removed that there's significant value to you, the equity holders. that's, they get there through highly aggressive modeling assumptions that just are mnot believable do not pass the laugh test in our view and in sun run's response here, it's not doing, in my view, a great job of taking the other side and arguing that these assumptions and uses are credible the second set of deceptions is what the tax credit should be

worth. and once again, sun run's response doesn't really get to that they kind of, you know, focus on this one irs section that we cited one time in the report, section 25d and said well, it should have been section 40, therefore they don't understand. but they don't deny that they take a system that really, you and i would get a tax credit based on roughly $3.38 per watt, that they somehow take it and magically go to the irs and say oh, our system is actually, the tax credit should be worth about $5 a watt. and part of the way they do that, there are a number of really aggressive things that they and their quote independent valuation firms do but one of the things that's pretty crazy is they forecast what type of investment tax credit they'll get, and they say hey, give us a tax credit on this tax credit. this recursive way of valuing

the tax credit it's farcical to say the that this is what congress intended so in this new bill, sthould it become law, sun run, the more debt it takes out, the more cash it burns, the sooner to implosion it comes, but are they going to stop bamboozling the irs as to what the tax credit should be? and, you know, like that's an open question, but i think that there's some scrutiny that the irs is paying to this now. that's what we think is the case. so if they cannot get that markup, they have a 50-cent-per-watt funding gap that we think they would have to fill and i don't think they can fill it absent issuing more stock >> so carson with all that said, and to be clear, they say that their rules that they follow are from section 48. i think you said section 40.

but the jump in the stock, did that squeeze your short position did you have to cover it all are you still short this company? >> we're still short this company. i mean, look, we got manchin's that day the stock opened up 25% to 40% we were planning on releasing our report that day. and joe manchin shocked everybody. but we had beta hedges in place. we still have beta hedges in place. those absorbed some of it. but yeah, we're still short this thing. we believe that, look, man, we think that the value for equity holders is probably 80% to 90% lower than what the company tells the street >> 80% to 90% lower. so you believe that the stock price then is worth 80% to 90% lower than what it's currently trading. >> where the stock price goes is not necessarily what the company is worth

we think the company is worth 80% to 90% less where the stock goes is a picture of what are interest rates? where is the market overall? we sit and make decisions, but bottom line is, we think the stock should be a lot lower than where it is. we thought it should be a lot lower when it was at 22, 23, so certainly around 30, yes, it should be a lot lower. >> in the title of this report, you say sun run esg is for everybody screws the government. and a few weeks ago you released a report with a similar title. haase for exaggerating, skcammin and grifting is this something we can be expecting more of from you >> quite possibly. if you go back over a year we

shorted a vehicle electrification company. the claims they were making were massively overstated i think the market gets that now. in the fall we shorted a bioplastics. you go to the guys who roll the truck douwn the hill. climate change is real, climate change is man made i want something to be done about it, but it's actually pretty disheartening when you get intoes they companies and you just see that on the tax side, it's just massive grift. and bamboozling the government inflating the tax incentives, and you do see executives at these companies dumping stock in many case on the back of this esg robo bid these are the people who are supposed to solve climate change, we're doomed i don't think that these are serious, that these are serious

companies. they're not serious businesses and like just from what i've seen in the space, and i think other short sellers have seen, you know, this isn't going to fly. >> well, it will be interesting to see where it goes from here carson block of mud dy waters, thank you so much for joining us today. >> fascinating conversation. super interesting to understand what's going on in that space. meantime, withhen we come bk we'll have senator tom cotton on speaker pelosi's possible trip to taiwan. and mohammad el arian will join "squawk box" comes right back after this

earnings out from marriott just a short time ago. can you see the stock is up. company reported $1.80 a share revenue came in at $5.34 billion. that was also well above expectations the company is also talking about third quarter of $1.59 to

$1.69. and ha that is above where the street is. they're saying $1.59 to $1.69. they say some interesting things about rev par. flat up 3% for the third quarter year over year but system wide, it is still down from 2019 kind of interesting. everything else, obviously, the reopening, the added 17,000 rooms globally during the second quarter. they continue to build lodging all around the world lot in china as well the world's biggest now with all of its different subject divisis the company now sees at 633 to

659. and the estimate was 598 so that's also a nice boost there. we saw the third quarter raising the estimates by about 10 cents, and now for the full year by more than that so expecting a strong fourth quarter as well, andrew. we got a lot more coming up. tom cotton's going to be joins us to talk tensions with china and why he supports speaker mos pelosi's possible visit to taiwan and brian deese will join us and don't miss our exclusive inteiew thrvwi bill ackman all coming up here on "squawk box. stay tuned hold for peyton. they'd huddle.... welcome to the peytonverse. such a visionary. game plan... you go. no, you go! and call audibles... double our investment in omaha! omaha! omaha! omaha!

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welcome back to "squawk box" this morning house speaker nancy pelosi apparently preparing to visit taiwan that trip coming at a time when u.s.-china relations are the poorest in some time >> the white house wants this debate to be about china, not about pelosi so it's trying to preemptively

place the blame on beijing they said her thing would not represent a change in poll city it happens the u.s. does not support taiwan's independence and opposes any unilateral change to the status quo from either side. >> beijing's actions could have unintended consequences that only serve to increase tension meanwhile our actions are not threatening and break no new ground we will not take the bait or engage in saber rattling >> still the white house appeared to distance itself from pelosi's plans she did not speak with the president about the trip before heading to asia. and kirby said it's her progress testify to go. she makes her own decisions. she spoke with leaders in kuala

lumpur about economic priorities and climate. no high-level u.s. official has visited taiwan since 1997. >> let's welcome senator tom cotton of arkansas later today he plans to offer new legislation to block china from owning land in u.s. the speaker is winging her way across parts of that part of the world. she is over indonesia, i'm told. and we'll see. could land in the next couple hours. but we don't know. you've been to taiwan, have you not, senator >> i have been to taiwan, like many legislatuors have been to taiwan it's a long-standing custom that lawmakers do frequently traveler

that newt gingrich has been there six years ago i went with a large group of senators and went on one of these so-called military aircraft which is not a stealth fighter or bomber. it's a commercial aircraft that the military owns to transport government officials around the world. china complains about it anytime a legislator goes to taiwan, but we we've never had this level of tension and it's because joe biden chose to make this an issue. there's no reason. it is an example of how beijing is trying to rewrite the status quo. that beijing is the one taking provocative actions. if he had just treated this like every other president has treated legislative trips to taiwan in the past, i don't think we would have seen this level of tension >> what do you think, we've been

trying to figure out president xi's mind-set on a lot of thing. we know what's coming up soon, it's going to be a lot of celebration about his expected third term, whatever you want to call it, as the leader of china. do you think that this is somewhat of a diversion from some of the domestic problems in terms of the economy or the unpopular covid lockdowns, whatever, would it be smart tor president xi or do you think he'd like for things to be calm before that event? >> you know, i think mostly he's just trying to see whatcan he get away with. we're almost a year to the day from the fall of kabul to the taliban last year. china's giant state-run propaganda outlet referring to

the aftghan effect. so xi jinping is trying to rewrite the status quo in our relationship with taiwan because he thinks he can get away it he has elevated a trip to presidential level it's very important that we not allow him to do that that once speaker pelosi goes to taiwan, we'll make it clear that we'll continue to send legislators there. kevin mccarthy has said he may travel there we need to make it clear that we will not back down from this long-standing relationship he just feels like can he get away something like this that's why it's important that he doesn't dictators everywhere, once they get away with one provocation they'll always be back for more. >> do you think the biden administration at this point will harden its stance in terms

of how much defense we would provide for taiwan you've seen president biden in the past has said had, and i don't know if he was mistaken when he said, it was walked back, obviously by some other members of his administration, but thaere are some people sayig now, if it becomes clear that china is not planning on doing it as planned and doing it in a negotiated fashion with taiwan, but that think are going to do it militarily, that we should change our position, say we would at least help taiwan defend itself, which i don't think that that's part of the one-china policy right now should it shift to that, where we make a commitment >> joe, as conditions and circumstances change, sometimes policies have to change. and conditions have changed in the western pacific to the point where we do need to change our policy and explicitly state clearly and deliberately that we

will aid taiwan if china goes for the jugular there. for decades we have been ambiguous about that, what's known as strategic ambiguity it's not been clear the people's liberation army has had anywhere near the capacity to execute an invasion of taiwan now is arguable that they can execute that operation that's why we should change our position and say we don't want war, but we will deter war by making it clear that we will come to taiwan's aid joe biden three times in nine months said that only to have his anonymous white house aides walk it back that gave us the worst of both worlds, the provocation of beijing without the deterrence of beijing that's why it's so important that this president , in a manned, deliberate speech with remarks prepared in advance, makes clear that america will

not tolerate china going for the jugular in taiwan. that's the best way to avoid what no one wants, which is a war with china in the western pacific. >> what do you make of the idea that you have to pick your fights you have to choose when to pursue your fights, and that this may not be the right time that this is about ego rather than strategy. and i want to read you, this is from tom friedman this morning why pelosi's visit to taiwan is utterly reckless if she goes ahead with the visit against biden's wishes, she'll be doing something reckless, dangerous. nothing good comes from it taiwan will not be more secure and prosperous as a result of this purely-symbolic visit, and a lot of bad things can happen and if you think our european allies who are facing an existential war with russia in

ukraine will join us, triggered by this unnecessary visit, are you badly misreading the world what do you make of that >> well, tom friedman has been apologizing for chinese communists for 20 years and hoping that the democratic party in america could emulate the power that they have so i'm not sure i would take advice from tom friedman on china. but squlooijoe biden hudshould responded. there was no reason to respond as he did to these chinese threats. china makes these kind of threats all the time and to escalate them to something that requires public presidential attention and to continue these leaks about how she's being provocative, how she shouldn't be traveling there, how our military is worried about it is only playing in to

beijing's hands. >> nattesenator, you may not ben about that but given the moment and the situation we're in, to some level it now feels like provocation to the extent that the chinese -- i'm not defending the chinese in this instance, but culturally they like this idea of a certain type of respect, you might describe as m mutual respect whatever it is, to the degree you think we should have good relations or at least try have workable relations with china, does this help >> well, i think what wouldn't help, in fact, what would hurt very badly is to back down under the face of these threats. just imagine all the other capitols that nancy please see

gopleelosi is going to advivisit in tokyo and seoul, what would it say about america's strength and resolve and credibility? it would be more dangerous to back down under these threats than it is perceived with what is once again a routine trip xi jinping knows it's a routine trip it is perfectly within the status quogoing back 40 year he's simply trying to see what he can get away with joe biden being nervous in the white house. >> what do you foresee as how it plays out, senator we're seeing some movement in the respective naval operations in the area and positioning here, positioning there. i don't know whether our guys are going to accompany the speaker's jet right in to

taipei if she does go there, we have to use all these caveats and ifs. but do you expect largely sebas symbolic things? you don't expect them to force her plane down or to forcibly not allow her to land. do you expect anything to that extent at this point is that possible >> no, joe, i don't expect that. d i do expect our military to be postured in a way to protect our interests and our american officials around the world to include taiwan where we've been traveling for 40 years i expect the speaker to be visiting with high-level officials as i have in the past and many others have in the past, and i expect china will huff and puff about it, but in the end, china doesn't want a war in the western pacific especially on the eve of xi jinping getting an unprecedented

five-year term any more than we do and the best way to avoid that is to be firm and resolute in the face of chinese threats. >> senator, even speaker pelosi has been, i guess she wasn't speaker, so there's, i guess when we say a high-level official hasn't been there since 1997, we're not trying to disrespect you couple years ago you weren't at a high enough level to be called that >> it's not so much about how long someone has served or whether they're high or back bench, it's distinction in the custom of the executive branch for 40 years, members of congress have travelled to taiwan the chinese communists know that the members of the executive branch in general have not it's not a universal role. but it's the general custom and practice since we recognized

beijing and ended our formal diplomatic relationship with taiwan in the late 1970s that members of congress travel to taiwan frequently, but members of the executive branch generally do not that's why this is completely within the norms and status quo of our relationship going back 40 years, xi jinping is trying to forcibly alterthat status quo. >> thanks, senate ercor cotton,t to have you on we hope you're right in the way this all plays out these unprecedented times. so many things we never thought we would have to worry aboutla we now worry about thank you. >> thank u. coming up, a check on some of the names moving in the premarket this morning take a look at uber. plus mohammad el erian then bill ackman had join us

"squawk box" coming right back with all of it

hfrgets welcome back to "squawk box" this morning. take a look at futures right now ahead of the open. got a little bit of time, a little more than an hour and a

half dow looks like it's going to open down. caterpillar reporting $3.18. you're looking at it off about 3.5% caterpillar ceo will be joining the gang on "squawk on the street" later this morning take a look at activision. now the video game company which agreed to be acquired by microsoft in january, $1.64 billion, roughly 28% lower than a year ago. you're looking at that stock off marginally because of that bid from microsoft and take a hoolook at uber they reported quarterly loss of

$1.33 per share, but its net loss of $2.6 billion shows unrealized, $8.07 billion, beating the consensus of $7.39 billion. that stock up big time this morning, joe up about 12.5% uber's ceo will be joining us later in the morning to break it all down brian deese is going to join us then bill ackman of pershing square will be our guest "squawk box" coming right back

welcome back to "squawk box. earnings and the july jobs report in focus for investors right now. joining us, mohammad el erian. he serves as president of cambridge university's queen's college. it's great to see you. before we get into what we're seeing in earnings and jobs, let me get your take on nancy pelosi visiting taiwan and the anxiety that it seems to be creating in the markets. >> actually, andrew, it's creat creating less anxiety than

expected china has a whole range of tools to use if it chooses to quote retaliate, for this situation. that includes economic tools that impact supply and demand in the global economy so this is highly uncertain. we are in an unprecedented world. and i think actually, we should be proud of the way the market is dealing with this >> proud of the way the market's dealing with it. why do you say that? >> because it's showing robustness i would have expected that we would see much more flight to safety than we've seen so far. and this market is saying, you know what -- >> does that suggest to you, though, that the risk is much higher than the market's anticipating >> it suggests to me it's difficult to price the risk. because there's such a range of possible responses by china. and there's a potential of escalation or potential that this thing goes away really

quickly. so it's one of these awful barbell situations, and the market doesn't quite mknow how t respond. but it's good that are tthe risk appetite is such that it's willing to hang around >> what is your take on where the markets are right now m we wnow? we went on a bit of a rollercoaster ride some people think things are better than we think i don't know what you think the fed is or isn't going to do. do they keep their foot pressed against the neck of the economy? or do you think you let up at this point >> you know, we've had the biggest rally after an fomc meeting ever the s&p was up 4% just on hearing the notion that we are at neutral and that is quite an impressive

rally. and joe and i have a bet on, and he got 40% of the way to winning just last week now we will see what the fed speaker says today we will see the extent to which they walk back that comment. neil cash karri whackalked it b little bit are we at neutral or not this is a market not driven as much by fundamentals as much as technicals and relative valuations >> i want, i want, i, we didn't stipulate exactly what one or the other person gets. and andrew got me some tacos one time and they were like gluten free, they weren't good. i want taco bell i want a 12-pack of like taco bell what do you want if we go to

3600 before 4400 on the s&p? >> so i'll get you a number four meal from taco bell, which you will enjoy >> and you in. >> if i win, i'd like you to take me to a mets game >> a series or -- >> let's not go there. we on a seven-day winning streak please don't say a single word >> tickets in the nose bleed section, is that okay for you. >> those are fun >> i'm not sure joe would do it. >> i'm fine. i would like that be a bleacher bum as long as you got plenty of credit card for beer >> you're on you're on, joe >> okay. >> the bet is on >> one thing i would say to you, so much attention on the china-u.s. issue don't lose sight, let's see

where the vacancies come down. the fed is looking for the labor market to cool down. otherwise they're going to have to press ahead with more aggressive hikes >> the data, mohammad tells us, we willy whet see whether will have to make good on those bleacher seats >> taco or go to a game. we could get tacos at the game, oh, my god coming up, brian deese is going to join us to talk about the chips act, inflation and more and our exclusive interview with pershing square's bill ackman. and as we head to break, a quick check on the futures "squawk box" coming right back

good morning u.s. stock futures in the red this morning, over in asia, stocks are falling as well with

a possible visit from nancy pelosi to taiwan. and in just minutes, we'll speak with bill ackman as the final hour of "squawk box" begins right now. good morning, and welcome to "squawk box" right here on cnbc. i'm i'm ann drew ross sorkin along with joe kernen. the dow looks like it's going to open down about 166 point s. we're going to show you treasury yields right now what you're looking at there as we flip that board around. we're sitting right now on the ten-year note at 2.553, folks.

so some of that i think has come a little bit as a result of this potential trip to taiwan and some of the nerves and anxiety about t weit we also have a lot of big names hitting the tape today we go to dom chu what do you have on tap? >> here's the earnings headliners out this morning. they're still coming in. but caterpillar is the big one the maker of heavy machinery for construction and mining. down roughly 3% right now. roughly 60,000 shares premarket. call it about 40 to 50 points shaved off the dow right there cat did take a hit from its exit in russian business operations because of the war and sanctions and elevated costs and supply chain issue. caterpillar one of those stocks seen as a global bellwether for

the economy. next you have uber, over 3 million shares have traded the ride hailing giant delivering a loss of $1.33 per share. it did have a drop in the value of its investments revenues did come in much bert tbetter than expected and uber turned cash flow positive jetblue is down. the airline company reports a bigger than expected flloss on slight miss on revenue expectations and marriott up over a percent, just over 3,000 shares of volume earnings and revenues both beat estimates and gave upbeat guidance, indicating perhaps that travel demand looks to have

momentum so mayrriott shares, jetblue shares moving in opposite directions >> regarding two of the stocks you just hit, viewers should hit a couple of big interviews ub uber's ceo and then the ceo of caterpillar. president biden's going to make a virtual appearance in michigan to talk up the $280 billion chips and science act. the president is expected to sign the bill into law any day now of the joining us to talk about the measure as well as the climate health and tax bill that democrats are trying to pass through reconciliation, brian deese. it's great to have you on, as always can i just start by positing what some economists and others have said about what engendered the inflation we're seeing obviously we know about supply chain and reopening and the war

in ukraine but some have said that there was too much spending. however you want to look at it whether it's the fed or the fed enabling congress to do the american rescue plan so that too many dollars were chasing too few goods and services so, with these two bill, the chips and the anti-inflation, the manchin bill, we're talking about another trillion dollars of money going out the door into what may be very good initiatives in your view but isn't that part of what caused inflation in the first part or you at least, is that on your radar, that that's a problem >> yeah, absolutely, look, i think this legislation should be best thought of as the opposite. we know that the dominant drivers of inflation are global. and the permutations that came from the pandemic and reopening as well as the impact of the war, if we look at areas of the

economy where we have seen real and significant supply side constraints, semi-conductors jumps out as a screaming example. the lack of supply and the lack of secure supply of semi-conductors has constrained production, has driven up prices in automotive but in other areas as well. and we now have in front of us a thoughtful, long-term strategy to build that supply, that supply side of the economy but to do it in a way that also protects our national security this issue goes well beyond the economics of supply and demand to the broader geopolitics of ensuring that the united states is not left vulnerable to supply chains globally that we may not be able to depend on so making this investment in a prudent way over multiple years will build out that supply, will provide some relief in terms of those who need more semi-incumbesemi

conductors to build things like cars we're very gratified that in a bipartisan way congress moved forward on this effort and we already moving out in thinking through the implementation of the bill >> the bill's not going to be bipartisan we don't know if it's going to get enough support everybody's talking about senator sinema would you say the same things? do you think makes sense at this point in time? it all adds up to maybe a trillion dollars tell us why it makes sense >> i think that bill is the appropriate economic prescription for the current economic challenges that we face, because at core it would do two things. the first is it would reduce prices, prices for health care

and prescription drugs, prices for energy across time and will help on the supply side as well. this bill is a balanced design package to provide long-term, technology-neutral incentives to build more supply of energy here at home, which will help address clean energy and climate change but also help build energy security and help us build greater supply of energy here in the united states. those are long-term challenges we need to solve, coupled with near-term relief on the spupply side it will reduce the deficit by more than $300 billion that actually is complementary to what the fed is trying to do. we haven't done deficit reducing legislation in some time this is an opportunity to do so, and to build on the deficit reduction that we've already seen across the economy. so i think this bill -- >> i'm sorry i was just going ask you

whether, is it a different bill than we would have gotten a year ago in terms of hydrocarbons is there more of a concession, we're going to have a much longer bridge than we thought? are there some incentives to continue natural gas or refineries or, you know what i'm saying in that regard, it's a different bill than we would have seen in some of the previous build back better bills, and maybe that makes it more palatable? >> well, i think this process has been through multiple iterations over the last several months where we have landed is in a highly highly prudent and sensible way. as you mentioned as i said, this provides technology-neutral incentives for hydrogen, for carbon capture for nuclear power in the united states, important to ensuring that we have a clean, carbon-free energy system across time, but to do so in a way that

makes sure we have security and stability and lower prices across time, as well as things like wind and solar. i think what we've seen and what we know is that this is a transition where if we provide the long-term incentives, the private sector will move capitol capital in those directions. this will provide the certainty for the united states to then become the world leader in technologies that are going to be needed globally as well >> we're nin a slow down, maybe not a recession. we don't need to get into semantics. but there tax increases, admittedly, it's 15% for, sort of a minimum tax but the analysis that's been done by some non-partisan groups or even penn wharton, what are you want to look at, about 50% of that would be shouldered by manufacturing.

we're in a slowdown already. is this the right time to be adding taxes to that sector? even people who make less than $400,000, there was another analysis that by 2030 that two-thirds of the increases in taxes are going to be paid by those people is any tax hike, when you're perhaps on the doorstep of a recession, does that make sense? have you thought about that? >> certainly have. there's a lot there. so let me unpack it. to the first point, the idea that this bill would raise taxes on people making less than $400,000 a year is wrong and has been rebutted. it will only close loopholes and make sure that the largest corporations, those with a billion dollars in earnings, less than 1% of companies in the united states pay a 15% minimum tax applied on corporates, not on individuals but to your point about

manufacturing, this is really important. if you look at this bill coupled with the chips bill, we on the verge of making the most significant investment in american manufacturing we can build on the jobs and build on the momentum for people to re-shore production and see the united states as a more attractive destination for manufacturing. that's the core of what these two pieces of legislation will do, and we have a real opportunity to do that, the 15% minimum tax is a prudent way to basically close the loophole in the system to make sure at the end of the day, all of the large corporates in america pay at least 15%. it doesn't affect existing credits like the r&d tax credit. it is a prudent, measured 2003

ach way >> the joint committee on taxation they say the average tax bill is going to increase in every income category in 2023, even on americans earning less than 200,000 a year taxes go up $16.7 billion. between $200,000 and $500,000 will pay $14 billion more. this gives, this is a "wall street journal" piece, give as lie to the democrat claim that no one earning under $400,000 will pay more taxes. that's a non-partisan joint committee on taxation. is there something they're putting this that's not true to get to those numbers? >> yeah, let me explain this issue. it makes sense in common sense terms. what this bill will do is for corporates, large corporates over a billion dollars who pay less than 15%. it would true them up. it defies the common sense view

that when a corporation pays more money that that actually results in a tax increase for working people, people making $50,000, $60,000 a year and. >> they're just wrong. you're just saying that they're wrong. the joint committee on taxation, i know you're saying you're again telling me who you're leveeing the tax on, but they have done analysis that that's where some of the taxes end up so you're saying that they're wrong. that's not factual >> so we think and broadly, there are a bunch of other independent analysts who agree that with respect to tax policy and the question of the incidence of the tax and common sense and who pays the tax, there are some corporation whose hadcorporations who will have to pay 15% but there won't be individuals who pay the higher amount. >> you don't delve into national

security you want to weigh in on speaker pelosi >> the speaker has every right to travel. and that's consistent with past practice you know that. a speaker has been there before, members of congress have been there before but our message to the chinese is there's no reason to use this as pretext for a crisis or escalation that's the message we're communicating, and we're obviously monitoring everything from markets to things on the ground very carefully. >> thank you for addressing that i didn't know if you'd want to weigh in on it we appreciate it thank you. coming up, pershing square's ben ackman joins us. this stands on a case and credit rdialior payments online you're watching "squawk box" on cnbc ng tons of polygons here! what's going on? where's regina?

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"squawk box" returns rig aer th ishtft

another busy day? of course - you're a cio in 2022. but you're ready. because you've got the next generation in global secure networking from comcast business. with fully integrated security solutions all in one place. so you're covered. on-premise and in the cloud. you can run things the way you want - your team, ours or a mix of both. with the nation's largest ip converged network. from the most innovative company. bring on today with comcast business. powering possibilities. welcome back to "squawk box" this morning one of the biggest stories in the world of business. a u.s. district court judge denying visa's request to be removed from a lawsuit that

stems from a court case brought bay woman who was forced to watch sexually explicit videos of herself distributed online when she was under age visa is kept in the case because it has continued to recognize as a merchant an immense and highly-visible business that it knew, used its websites to host and monetize porn. in a statement, they say this pre-trial ruling is disappointing and mischaracterizes visa's role joining us is bill ackman, ceo of pershing square he has taken a vocal stance against visa and an activist and founder of the justice defense fund, thank you for joining us to talk about what is an immensely important story, both when it comes to

child pornography but the role financial services companies, in this case, visa, may have played in it. bill, i want to start with you you've been very vocal online about this and working behind the scenes related to it where does your interest in this come from, and tell us about how it began >> my interest comes from the fact that i have four daughters, and i read this article that nick kristoff had written in the "times" about mind geek and how it operates and the harm it's caused and the horror of it all. one of the center pieces of the article is how the business persists because the payments are funded through the visa and mastercard network what shocked me, the network is one of the greatest businesses in the world, owning the pipes that convey commerce and taking a little royalty on every payment that goes through, but a

key part of their business is visa's job is maintaining brand integrity. this is one of the most important brands in the world. when people take a visa or mastercard out of their wallet, what drive them is the brand regulatory risk. but remarkably, the company, despite being entirely aware that there's child pornography on these sites, they continue to provide payment services, until the kristoff article, and then they shut down the sites overnight which would have bankrupted them, and within a matter of weeks they re-authorized the merchants and started accepting payments again and the crime continues. you know, there have been hearings in canada, around the world, people doing the best to shut down these companies, and the ultimate regulator is visa visa tomorrow could shut down mind geek. we had a court decision that

came down on friday where it's very, very clear that the swjud is extremely concerned with visa the wheels of commerce of child trafficking are, look at, i'm not making up the language look at the judge's decision it's really remarkable >> lila, you have been fighting this cause for a very long time. you've been in touch with visa, you've brought your concerns to them directly, there have been e-mails and other documentation about this what has been the reaction that you've gotten from visa? >> yeah, i mean, visa has known about this for a very, very long time as you said, not only from my own personal communications all the way to ceo level and executives and vps, but also through the news egregious cases of child rape,

proliferating in the news cycle. they were very aware that this has been going on, even as early as 2019, as the london sunday times did an investigation of porn hub and found within minutes, dozens of illegal videos, content including children as young as 3 years old. when that was in the news, paypal immediately with drew their services from mind greek uni lever has stopped doing business them. but visa persists, and they have persisted. they have refused to disengage from this company, essentially, as the judge said, continuing to give them the tools through which they complete their crimes of child trafficking and distribution and monetization of child pornography, and it's unacceptable to this day, before i got on

this show, i went and checked. dozens of videos that would constitute trafficking, rape, completely blatantly, non-consensual content coy take my visa card this moment and purchase ads. 4.6 billion ad impressions avenue day, that visa enables to be monetized that actually monetize and commercialize the torture. victims say my trauma will live on after i'm dead. the harm is so serious i could take my visa, purchase an ad to make sure that video will be monetized and continue on the internet. and al kelly needs to stop and implement policies that would prevent this from happening in the future what does that mean? just like credit card companies have anti-money laundering

policies they need anti-trafficking policies that say we will not do business with user-generated porn sites unless they reliably verify the age and consent of every individual in every video. that will halt this exploitation >> you have said on line that you believe that there could be huge liability for visa as a company, for the board and the board members individually and for al kelly personally, potentially even criminally. why do you say that? >> sure. really, there are two forms of liability here the traditional breach of fiduciary duty when a company has a product or service that can cause harm. like listeria with soup or jam or something like this a board has an obligation to have a monitoring sis them in

plsystem in place. in this case, the payment system used for child trafficking they don't have that system in place and are not properly monitoring that risk a case went to the supreme court and the supreme court found that boards of directors have p personal liability for systems either they have a system in place or they don't. if they don't, they have caremark liability if they don't they have criminal liability for being aware of and fac facilitating the child trafficking. the government does not allow this conduct i mean, laleh is not afraid to

deal with people in power. she's been dealing with the executive vice president of global brand reputation and security, the highest-level people who report to the ceo and, you know, what i find particularly, i would say abhorrent here, is if you read the visa annual report and the letter to shareholders, again, another example of a company virtue signaling, how they care about communities, empowering economically disadvantaged people and they say that in writing, but here's a way, you think about the worst harm economic, physical, mental harm you can impact upon a human being, it's having a child traffic and video of the rape appear i find it hard to talk about it. any member of this board who hasn't read that court decision. this is a judge that joe kernen

would like an extremely conservative judge. a very narrowly-written decision he's not saying visa is responsible for anything that takes place. he's not saying that visa is liable what he's saying is they are the known access trory to a crime because they've known or should known that various mind geek websites, that this is taking place today. i don't want to look at myself but take a look at what's going on here. >> bill, just to put it all on the table here from a disclosure perspective, given that there have been questions about statements you have made over the years and potential stock investments, do you have a short position, a long position in anything related to this, in visa, mastercard, american express, any type of retailer that you think would either

benefit or get hurt from this in some way that i can't even, that i don't know about >> absolutely not. we own seven stocks. they're publicly disclosed lowe's takes visa and mastercard, okay but so does restaurant burger king you know, use the payment system i have no economic involvement here whatsoever. zero and, you know, it's unfortunate that i can't actually advocate on behalf of something that's, you know, the benefit of humanity without people thinking i have some side interest. we gave up short selling a number of years ago. if i could do it all over again, we would have had people protected a long time ago. in this case, absolutely no economic interest whatsoever of any kind period >> and you don't intend to >> i have no interest

whatsoever >> lila, help us with this from a disclosure perspective e as i was reading about you and the work that you've been doing, there have been critics who have called trafficking hub, which is the group you work for, an abolitionist endeavor trying to reframe conservative ideas of sexual purity. i want to put that on the table so everybody understands your history as well. >> absolutely, i would respond to that by saying it's absolutely untrue. the trafficking hub movement is supported by 600 organization around the world sex workers and those in the industry have been vocal supporters the queen of porn of all time has been very vocal.

192 countries. this is about sex crime scene, masquerading and this is in the interest of the porn industry itself. we're not here to put an end to the porn industry. we're here to put an end to child sexual abuse mainstreamed on pornography sites, namely, porn hub >> we're talking about visa right now, but where is mastercard on this but also what about the internet service providers that effectively allow access for the public to get to these sites, and what kind of culpability, accountability they should be held to. >> absolutely. mastercard is still doing business with mind geek as well. and i've been in touch with

their executives in the same way. the former ceo recognized child sexual abuse material and they stopped doing business for a time they have re-iinstated their business with the advertising arm of mind geek the top executives, management level, have come to me and told me that the only thing they're concerned about, the only thing that can make them change the way they do business to halt this kind of exploitation is the credit card companies. that is their main concern, and that is why visa and mastercard have the most power. they have more power over the situation than government legislation. the moment that they enact policies that require age and consent verification for every person in every video, immediately, this company will fall in line so i think that their power in all this is extremely, extremely

important. >> hey, bill, two things, real quick. where do you think the line should be? i know you think it's narrow, you know, if there was a bar that routinely was providing drinks to underaged kids for example, or to overserving people when they were routinely creating drunk driving issues for example, should they be held to account we talked about guns, other things where do you think the line should be for this >> i think the line should be the streaming. the payment is integral part it's an extreme measure when visa or mastercard shuts down a merchant, but a merchant's business is illegal. when online poker was illegal,

and it's still illegal in various places, visa and mastercard didn't provide he payme payment for those sites. if there is online heroin and cocaine, i guarantee they aren't providing payment. the most egregious crimes are with the kids. here we have a judge that's rendered a decision against visa, and it's very, very clear what the facts are read where the judge is coming from i encourage everyone to read the decision i find extraordinary that a company, visa doesn't actually do very much think about their business model. it's a brand, got some pipes they authorize and de-authorize

merchants, and then they figure out which sports teams to sponsor, whether the olympics, and they fight with mastercard over that. that's fundamentally their business model the thing you need to focus on, the board needs to focus on, is their reputation and regulatory risk let's not put aside the economic loss there's a case making its way through the court where the victim is suing. this is going to be a jury trial, okay. we're actually making sure, you know, in many cases you have a class action lawyer gets together people, that's great for the defendant. they can settle the case it's great for the lawyer because they with make a windfall the first test case makes its way through the court, how do you think the jury is going to react. what kind of award, and multiply it >> i would add this is one

plaintiff. but i have victims reaching out to me on a regular basis i have been contacted by hundreds the floodgates have been opened. i guarantee you, you're going to see many lawsuits following this one. this is not the end for visa >> we are going to press pause for a second and thank u and bill, we're going to come back with you after the break to continue a little bit of this discussion as well as talk about the markets, nainflation and wht you think is happening next in our economy. "squawk box" is coming right back after their thanks

welcome back to "squawk box" right here on cnbc we speaking with pershing square's ceo bill ackman we want to talk to you about the economy, the fed, the state of the markets. you've also been tweeting recently i should say that i hope you're over covid i know you said you had had covid, and that's why you're spending so much time on twitter. but you have a lot of very strong views about inflation, about where the economy's headed what's your current take about the economy itself but also where the stock markets are in terms of fairly valued or not. >> i think the economy's quite

strong right now the question's where it's going to be in six months or 12 months we're at full employment, wages are going up howard hughes company we own is opening a food hall. we've had to hire 600 people and they've been working really hard to do it. they've only hire 3-d 350 people if you're looking for a job, there's one there. i'm still a little congested from covid and jamie talked about number one, this is the lowest default rate period in history for the consumer part of the bank. their full spectrum of people that they, you know, poor to rich, that bank to j.p. morgan and so on are in the best position they've ever been i do think lower-income people are getting a lot of pressure

from higher gas prices, higher food prices, higher rental rates. and i think the biggest problem with the economy is inflation. and inflation is roaring it's continued to rage, and unfortunately, the steps taken by the federal reserve have not been effective since june, the first 75-basis-point increase. the stock market's up, depending on the market, 10% 1r1% or more and you know, with the fed today at, i'll call it 2.5%. the market saying that the fed fund also average only 40 basis points above the current rate over the next two years. and that implies, really, no financial typing at all. just at the last meeting, jerome powell said the fed was now

comfortable that it reached a sort of neutral level of rates which again, a fairly extraordinary statement. >> what would you be advocate eggadvocatein the fed do then? >> the fed has to be aggressive with raising rates, the high 3s, the 4. but they're going to have to stay 4% plus for the foreseeable future 12, 18 months or so to kill the inflation. they may need to take rates higher the biggest risk to the markets is that people aren't pricing that in. the fed has to take its foot off the accelerator. when you can borrow money based off a 2.25% sofa rate, the base rate for borrowers and inflation is 9%, and it's going to be persistent, you

borrow as much money as you can. the current prevailing level of rates is amping up the economy, which is why we are having the inflation that we are having now. coupled with the global factors of course. >> do you like the chips act, the other reconciliation bill that manchin is backing? we think of the fed. but a lot of times the fed is just enabling whatever administration, whatever congress is doing, you know, they got to keep rates low they're sort of like partners in crime, if you will, for, at least in my view, for some of the spending that goes on. do you like either one of those piece of legislation >> i think there's merit to what you say. unfortunately, when a new regime comes into power they want to do something for the people that elected them and here it's very, very easy when you control the congress and it's a new administration,

to spend money and unfortunately, the $2 trillion that was spent was the, you know, the extra fuel that caused the extreme inflation and the extreme inflation is on people who are, you know, the biden administration was trying to ep had,help through the stim package. the chips act, i haven't read these in detail, but i feel like the chips industry, you have very well-run companies. do they really need $50 billion, what whatever the number is >> a lot more than that. when you heard it was called the anti-inflation bill, i kind of get insulted with that i'm not the smartestf guy, but really >> i think the american people are smarter than that. i think it will add to

inflation, and we're helping people who, i don't think, need the help i think every u.s. chip manufacturer or global chip manufacturer, if i were taiwan semi-conductor, i would want to have as much presence in the united states as possible in light of the geopolitical situation. they don't need an incentive to come here. american companies don't need the incentive. government stimulus can be very powerful and helpful, but you've got to be very, very thoughtful about it, particularly at a time of raging inflation. >> you didn't think the risk was being properly accounted for, if you will, by investors can you describe to the extent you've put on some kind of positions to try to mitigate that risk? >> sure, so if you think about our business we have the most transparent strategy in the world. more than 100% longs companies like hilton and lowe's and chipotle look at how those businesses are

doing. pretty much every company we own is putting up phenomenal results. so we're very happy in long america in great companies we have an interest rate hedge in place which we've had in various forms since december 2020 because of our concerns about rates. smaller today than it was sort of back then but our implicit bet is short rates are going to have to go higher than the market is pricing in so we have a hedge that pays off as the two-year rate goes higher and we also have a hedge where 30-year rates remain, go higher h than people expect, we also profit, and that's kind of a hedge against the hedge. if the federal reserve doesn't do the right thing in raising rates quickly, inflation's going to become very persistent and affect how people think about, you know, long-term interest rates. i think we're headed toward a

period of persistently higher rates. you know, i mentioned in one of my tweet, one of our companies, i had a board meeting recently, and the accounting firm which will remain nameless upped their rates year on year, this is for a global business, 6%. and i've never seen actually seen this in my years of serving on boards of directors. it deserve described as due to inflation. wage and otherwise. so if you think about accounting firms, contractually building in 5% for inflation, another 1% for scope and agreement and assignment, that's certainly going to persist for year of contract. but you've seen this in wage agreements, in union agreements. chipotle seeing a price they have to pay for their workers. so we think the wage inflation spiral is under way. and we think you couldn't have it more in the mind of every consumer in america, of every

income, the sticker shock if you want to go in the supermarket and get an avocado. and the organic ones are high. our view is if the fed is aggressive on short-term rates. another interesting fact i'll mention. on this sort of g.d.p. number. people talk about gdp on a real basis. so when the deflator, that is the, inflation factor is approaching something, 9%, in order to have positive gdp growth. have you have to have phenomenal growth. what's interesting, as inflation comes down over the next couple of years, and i think it will, a couple of basis points, that will, if nominal inflation comes down to where we expect it to, you will see positive gdt growth again so clearly not in a recession. so i totally agree that we are

not in recession now. and if we are smart about how we handle interest rate policy, kill inflation, if we continue on the way we're on, we have a major, major economic problem. >> bill, we want to thank you for joining us for this lengthy conversation. we appreciate your perspective on all of it for bringing this visa issue to our attention. before we go, very quickly. we have to go through disclosures around stock. someone was asking if you are planning to finance any of the lawsuits against visa in the future or other credit card companies, either chairitably or otherwise, and i wanted to put that on the record if i could. >> yes, today, we've done nothing. just yesterday, i had a conversation with michael bowie, who is the lawyer at brown rudnick. and asked them, how they have been financing the litigation. they've gotten money from charity ofitable organizations. and he's working on a contingency. and i've offered to help.

so i expect, we want the victims here to have counsel that is not incentivized to settle, if you will, because we think there needs to be major, major -- first of all, i think there's an example to be made here, and two, i want the number to be very, very large numbers. i want this thing to get to a jury trial. i want the jury to hear about the fact. i want the jury to hear about the dialogue with the ceo of visas. >> fair enough. >> so we're going to finance. offered to finance this litigation philanthropically. >> right. >> we're going to work out the details. so yes, they have a fierce well- financed advocate that will not be forced to settle the case. >> bill, thank you again. appreciate it very, very much. >> sure. >> okay, andrew. the judge was so conservative. he said, the judge made the right move. so i guess he's saying that he agrees with me that that's the person too to get to for these

decisions. is that what you heard, andrew? because he's conservative, he's probably right? is that how you read what he was saying? >> not necessarily. >> that's what i heard. that's what i heard. so he must really be a good judge and one that we can actually rely on a decent opinion from? >> a judge that all sides can -- >> he said me. let's get to the new york stock exchange. jim cramer. you got uber coming up. were the numbers that much better than people thought, you think? >> well, look. we wanted free cash flow this year. darius said we have to change what we're doing. the investors want safety and free cash flow. and he delivered. and it was rather remarkable. he delivered terrifically. just a tremendous amount going right for them, for drivers and more than enough drivers to take good.

it has been an astonishly good. maybe more than anybody thought when they put their minds to it. it will be an exciting interview. it truly is a monumental move to start making a free cash flow. i think he can keep going. thing is the first good quarter. >> so today is tuesday. who is dupont. >> we have caterpillar. there's a lot of weakness. more than i expected. in construction. resources are good. it's obviously, europe is starting to hurt them. and asia is hurting them. the stocks that are down a great deal. stocks had to run into the quarter, which in retrospect was ill advised. i don't think it's terrible. >> by the way, didn't you guys call out kelly, before he sailed? kelly is a legitimate business person. i'm not defending anything. i'm just saying -- >> jim? he has been called.

interviews have been sought. i believe there are efforts to set up interviews, efforts by visa, and agreements made. there's a long behind this. >> al kelly comes when they have money. i'm just trying to, i want to try to book him. but obviously, this is devastating stuff. but al kelly is a legitimate businessman. i want to hear his side. there are people making payments for years that support a lot of things that you and i would not want. this is obviously one of the more egregious. it was not something they should be held accountable tell now. again, i'm not saying al kelly

is a great guy or bad guy. i just want to know what al says. >> i would love -- i hope you can get an interview with him. i would love to get an interview with him. i think there's a lot of people who would love to hear his side of the story. and i will say, and it goes to the point i think you just made, these companies have not, historically, not been held accountable. >> no. >> for misdeeds that they have ultimately financed. and that has been a perspective that visa and mastercard have taken, across the board, on so many issues, over the years. this is just a -- >> they think they're greyhound buses. like mark zuckerberg. >> that's the argument they have made. and look. by the way, there are lots of failures in this story. there is probably argument about the failure of law enforcement to even allow this to happen. >> i was going to say, it's justice department. these case are, the justice department is reading this. i mean, if you're -- well,

look. if you're at the highest level, if you're merrick garland, i mean, aren't you sifting through? right? trying to make a case? maybe. maybe not. it's worth doing everything on this because it's really important. >> jim cramer, we will see you in just a couple of minutes. >> absolutely. >> looking forward to the big show. and all of those big interviews you got coming. meantime, want to get over to john chu who has some of the premarket moves. >> here's what i want to show you. something a little more interesting with regard to some of the action we're seeing in two heavily trafficked that you might see on the bottom of your screen. what we want to show you is what is happening right now, with amtd digital, and amtd idea group. this is unusual activity going on now. amtd is up about 21% in premarket trade.

amtd is up. amtd digital just went public a few weeks ago, with unusual upside volume. making their way through a lot of social media boards, social media channels, and internet messaging boards. basically, they're companies that are affiliated with each other, both based in hong kong that do digital services and whatnot. the only reason we want to point this out to you is the trading activity has become very unusual. and by amtd's own admission, they say they have no idea what is going on and they are keeping an eye on what is going on. but nothing material has changed there business. the reason it's crazy, amtd digital, is now worth north of $130 billion. its parent company is worth roughly $4 billion. again, this is one of those kind of buyer beware, if you're going to traffic in these names, please understand what is going on.

it doesn't appear joe andrews' fundamentals are at play here, by the company's own admission. a quick check on the markets. we're about a half an hour before we're set to open. and let's show you the board. we're going to be off about 165 points. nasdaq down 110 points. s&p 500 off about 25 points. joe, see you tomorrow night, my friend. make sure you join us tomorrow. squawk on the street begins right now. good tuesday morning. welcome to ""squawk on the street."" futures, as speaker pelosi arrives in taiwan this morning. big rattle in corporate results. yields continue to fall. 10-year now, below 2.55. simmerin